Annual report pursuant to Section 13 and 15(d)

Segment Information

v3.21.2
Segment Information
 12 Months Ended
Sep. 26, 2021
Segment Reporting [Abstract]  
Segment Information Segment Information
We are organized on the basis of products and services and have three reportable segments. Our operating segments reflect the way our businesses and management/reporting structure are organized internally and the way our Chief Operating Decision Maker (CODM), who is our CEO, reviews financial information, makes operating decisions and assesses business performance. We also consider, among other items, the way budgets and forecasts are prepared and reviewed and the basis on which executive compensation is determined, as well as the similarity of activities within our operating segments, such as the nature of products, the level of shared products, technology and other resources, production processes and customer base. We conduct business primarily through our QCT semiconductor business and our QTL licensing business. QCT develops and supplies integrated circuits and system software based on 3G/4G/5G and other technologies, including RFFE, for use in mobile devices, automotive systems for telematics, connectivity and digital cockpit and IoT including wireless networks, broadband gateway equipment, consumer electronic devices and industrial devices. QTL grants licenses or otherwise provides rights to use portions of our intellectual property portfolio, which includes certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products. Our QSI reportable segment makes strategic investments. We also have nonreportable segments, including QGOV and our cloud AI inference processing initiative and other technology and service initiatives.
Our CODM allocates resources to and evaluates the performance of our segments based on revenues and earnings (loss) before income taxes (EBT). Segment EBT includes the allocation of certain corporate expenses to the segments, including depreciation and amortization expense related to unallocated corporate assets. Certain income and charges are not allocated to segments in our management reports because they are not considered in evaluating the segments’ operating performance. Unallocated income and charges include certain interest expense, certain net investment income, certain share-based compensation, gains and losses on our deferred compensation plan liabilities and related assets and certain research and development expenses, certain selling, general and administrative expenses and other expenses or income that were deemed to be not directly related to the businesses of the segments. Additionally, unallocated charges include recognition of the step-up of inventories and property, plant and equipment to fair value, amortization of certain intangible assets and certain other acquisition-related charges, third-party acquisition and integration services costs and certain other items, which may include major restructuring and restructuring-related costs, goodwill and long-lived asset impairment charges and awards, settlements and/or damages arising from legal or regulatory matters. Our CODM does not evaluate our operating segments using discrete asset information.
The table below presents revenues and EBT for reportable segments (in millions):
2021 2020 2019
Revenues
QCT $ 27,019  $ 16,493  $ 14,639 
QTL 6,320  5,028  4,591 
QSI 45  36  152 
Reconciling items 182  1,974  4,891 
Total $ 33,566  $ 23,531  $ 24,273 
EBT
QCT $ 7,763  $ 2,763  $ 2,143 
QTL 4,627  3,442  2,954 
QSI 916  (11) 344 
Reconciling items (3,032) (475) 2,040 
Total $ 10,274  $ 5,719  $ 7,481 
The net book value of long-lived tangible assets located outside of the U.S. was $2.9 billion and $2.3 billion at September 26, 2021 and September 27, 2020, respectively. The net book value of long-lived tangible assets located in the U.S. was $2.2 billion and $1.9 billion at September 26, 2021 and September 27, 2020, respectively.
We report revenues from external customers by country based on the location to which our products or services are delivered, which for QCT is generally the country in which our customers manufacture their products, and for licensing revenues, the invoiced addresses of our licensees. As a result, the revenues by country presented herein are not necessarily indicative of either the country in which the devices containing our products and/or intellectual property are ultimately sold to consumers or the country in which the companies that sell the devices are headquartered. For example, China revenues could include revenues related to shipments of integrated circuits for a company that is headquartered in South Korea but that manufactures devices in China, which devices are then sold to consumers in Europe and/or the United States. Revenues by country were as follows (in millions):
2021 2020 2019
China (including Hong Kong) $ 22,512  $ 14,001  $ 11,610 
South Korea 2,368  2,964  2,400 
United States 1,406  1,129  2,774 
Ireland 1,160  867  2,957 
Other foreign 6,120  4,570  4,532 
$ 33,566  $ 23,531  $ 24,273 
Reconciling items for revenues and EBT in a previous table were as follows (in millions):
2021 2020 2019
Revenues
Nonreportable segments $ 128  $ 133  $ 168 
Unallocated revenues (Note 2) 54  1,841  4,723 
$ 182  $ 1,974  $ 4,891 
EBT
Unallocated revenues (Note 2) $ 54  $ 1,841  $ 4,723 
Unallocated cost of revenues (277) (340) (430)
Unallocated research and development expenses (1,820) (1,046) (989)
Unallocated selling, general and administrative expenses (538) (401) (413)
Unallocated other income (expenses) (Note 2) —  28  (414)
Unallocated interest expense (559) (599) (619)
Unallocated investment and other income, net 166  105  243 
Nonreportable segments (58) (63) (61)
$ (3,032) $ (475) $ 2,040 
Certain revenues were not allocated to our segments in our management reports because they were not considered in evaluating segment results. Unallocated revenues in fiscal 2021 were comprised of the release of a variable constraint against revenues not previously allocated to our segment results. Unallocated revenues in fiscal 2020 were comprised of licensing revenues from Huawei resulting from the settlement agreement signed in July 2020 and royalties for sales made in the March 2020 and June 2020 quarters under the new global patent license agreement signed in July 2020. Unallocated revenues in fiscal 2019 were comprised of licensing revenues resulting from the settlement with Apple and its contract manufacturers in April 2019.